Correlation Between FC Investment and Zegona Communications
Can any of the company-specific risk be diversified away by investing in both FC Investment and Zegona Communications at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FC Investment and Zegona Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and Zegona Communications Plc, you can compare the effects of market volatilities on FC Investment and Zegona Communications and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FC Investment with a short position of Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Zegona Communications.
Diversification Opportunities for FC Investment and Zegona Communications
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FCIT and Zegona is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications Plc and FC Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FC Investment Trust are associated (or correlated) with Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of FC Investment i.e., FC Investment and Zegona Communications go up and down completely randomly.
Pair Corralation between FC Investment and Zegona Communications
Assuming the 90 days trading horizon FC Investment is expected to generate 15.68 times less return on investment than Zegona Communications. But when comparing it to its historical volatility, FC Investment Trust is 19.1 times less risky than Zegona Communications. It trades about 0.06 of its potential returns per unit of risk. Zegona Communications Plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,950 in Zegona Communications Plc on August 26, 2024 and sell it today you would earn a total of 24,850 from holding Zegona Communications Plc or generate 312.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 92.42% |
| Values | Daily Returns |
FC Investment Trust vs. Zegona Communications Plc
Performance |
| Timeline |
| FC Investment Trust |
| Zegona Communications Plc |
FC Investment and Zegona Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Zegona Communications
The main advantage of trading using opposite FC Investment and Zegona Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, Zegona Communications can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Zegona Communications will offset losses from the drop in Zegona Communications' long position.| FC Investment vs. Centaur Media | FC Investment vs. Samsung Electronics Co | FC Investment vs. Arrow Electronics | FC Investment vs. Catalyst Media Group |
| Zegona Communications vs. SupplyMe Capital PLC | Zegona Communications vs. Premier African Minerals | Zegona Communications vs. SANTANDER UK 8 | Zegona Communications vs. Vodafone Group PLC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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